Compliance and Risk Management

GRI 3-3

GRI 2-15, 2-16, 2-23, 2-24, 2-26, 2-27

The lasting success of our company rests on taking a responsible approach to the risks arising from our business activities and the changing political, environmental and economic landscape. This also includes risks that could compromise our high compliance and integrity standards. As a wholly owned subsidiary of the Volkswagen Group, we are incorporated into its extensive risk management and internal control system (RMS/ICS) and covered by corresponding guidelines. We implement these requirements by means of a company directive at VWI. In risk management, we focus on the ongoing monitoring of processes to ensure compliance and integrity. Property-specific risk analyses are used to strengthen our methodology.

The compliance management system at Volkswagen Immobilien is also laid out in a separate guideline. In early 2023, we additionally set up a separate Compliance, Integrity and Information Security sub-department to strengthen our organization, with the Information Security sub-department covering data protection and IT security. The sub-department is directly linked to the senior management team, meaning that these central topics are reported and managed directly.

Volkswagen Immobilien has established a Governance Committee to ensure cooperation between the risk management, integrity, compliance and legal functions in accordance with the Group guideline for governance functions (KRL 31). It is made up of permanent representatives from the respective divisions, who are responsible for helping to identify, assess and manage risks at an early stage. The Head of Sustainability is consulted on all environmentally relevant compliance issues. The committee’s remit also includes ensuring effective information sharing, efficient cooperation between the units, avoiding operational redundancies and fulfilling reporting obligations to executive management.

At VWI, the Compliance Officer coordinates interdisciplinary collaboration between departments with the aim of recognizing and avoiding misconduct. The Compliance Officer reports regularly to the VWI Board of Management and senior management about all material changes and developments regarding relevant compliance issues. Both the Compliance Officer and a dedicated compliance assistant who can be contacted by email are also available at any time to handle more in-depth questions. The company informs all staff about new topics and updated guidelines each quarter.

Integrity and ethical behavior are an utmost priority at Volkswagen Immobilien. The central means of strengthening employees’ awareness of the matter, guiding staff and directing them to people who can provide help if it is needed is the Volkswagen Group’s Code of Conduct. The Group guidelines that apply to us, and that we have implemented in our own guidelines, include those on:

If employees become aware of a possible violation of the Code of Conduct or any other form of misconduct by a member of their team, they can report their suspicions directly to the Compliance Officer and the Integrity Officer, who are available at any time to answer questions about compliance with guidelines and possible breaches of rules. They can also report suspicions – anonymously, if they wish – using the Volkswagen Group’s whistleblower system. Additionally, misconduct can be identified using spot checks, which are carried out by Volkswagen Immobilien at least once a year. In the event of misconduct, appropriate remedial action is initiated, such as meetings with a manager, official warnings or additional training. In the 2023 reporting year, a total of 5 incidents were reported at VWI that resulted in action and/or sanctions being taken. Overall, there has been a substantial increase in the uptake of compliance advice at the company. We see this, combined with the low number of violations, as a positive development and a result of our wide-ranging training activities.

Information is shared with our employees via compliance and integrity training courses online or in person, extensive literature, talks by the Compliance Officer and intranet posts. VWI employees are trained in line with Group standards and sensitized to both legal and ethical issues. All members of staff receive a certificate when they complete their Code of Conduct training. In 2023, onboarding training was held five times for new employees and trainees to familiarize them with all relevant compliance and integrity topics. The compulsory training courses on the Code of Conduct are refreshed every two years (indirect areas) or four years (direct areas). The direct area includes our employees from gardening, the caretaking team and the building technicians. The indirect employee area comprises the area with office activities. Completion of employee training on the Code of Conduct is checked by us every six months and reported to the Volkswagen Group. In addition, there is mandatory training on money laundering prevention for certain areas, such as brokerage, controlling and accounting.

Training on the whistleblower system was also provided in 2023 for all those who come into contact with the whistleblower process, such as staff from HR, the legal department or the works council. These persons assist with investigations into potential breaches of the rules or are suitable contacts for whistleblowers. In this training course, the participants learn about the rights and obligations of the key contact points, including the reporting channels for the whistleblower system and the definition of serious and other breaches of regulations.

In addition, the business human rights training course on the new German Supply Chain Due Diligence Act (LkSG) was launched in November 2023. It raises awareness of human rights and environmental violations within the supply chain. Web-based training (WBT) is mandatory for all employees in the indirect area, while the direct areas receive face-to-face training from the Compliance, Integrity and Information Security department. At Group level, the topics of compliance and integrity were bundled into one area in 2023:

The “Together4Integrity” program, which was part of the Group-wide integrity and compliance requirements, will no longer be managed and controlled centrally at Group level in the reporting year, but will be transferred to the responsibility of the companies. Volkswagen Immobilien fulfilled the 104 measures in all from the 11 key initiatives and confirmed them to the Group as part of a self-assessment. Certain evaluations will continue to be requested by the Group. One of them is the implementation rate for the Code of Conduct, which is reported to the Group twice a year and must amount to at least 90% of the workforce.

A perception workshop is no longer mandatory. In 2023, there was a training course for supervisors and an offer for employees as measures to deepen the integrity topics. The Integrity Skill Set provided advice and tips on how to deal with difficult situations using real-life case studies as examples. Various options for action were highlighted and discussed with the participants during the event.

In addition, the Integrity Officer offered training for managers on the topic of “speak-up culture.” As part of this event, participants were encouraged to reflect on their own leadership behavior and the culture of error within their team. The focus was on the opportunity to share experiences, raise awareness and provide practical tips for implementation.

In terms of compliance, Volkswagen Immobilien has also focused on the areas of taxes and the environment:

To ensure that tax obligations are fulfilled properly, senior management commissioned the Finance and IT department to set up a tax compliance management system. Among other things, the system should help to prevent tax risks, safeguard the company’s own tax position with regard to high-risk matters and identify commercial opportunities arising from appropriate tax planning.

With its environmental compliance management system (ECMS), the company is taking a systematic approach to ensure that it fulfills the Volkswagen Group’s environmental targets and obligations while complying with legal requirements. The system contains minimum requirements for the management of environmental impacts, assesses risks, sets out prevention and control mechanisms, provides guidance on measuring effectiveness, and defines standardized reporting both within VWI and vis-à-vis the Volkswagen Group. This rests on a regular survey of each department concerning possible environmental risks, which are subsequently compiled in an environmental risk register.

In connection with the introduction of the ECMS, a register of all legislation relating to the environment (UIS) was also introduced. This provides staff with information on all relevant legislation and ensures that steps are taken to comply with it. Laws are reviewed quarterly by an external consulting firm. Legislative changes and new laws are noted immediately and made available to those responsible internally. Clear responsibilities, control processes and procedures in the event of possible non-compliance with laws are described in a work instruction. Compliance with the law is regularly tracked by the Head of Sustainability in her role as point of contact, as well as by the environmental expert, and presented to the senior management team at least once a year. The report is subsequently submitted to Volkswagen AG.

As part of the efforts to enhance the company’s security organization, the handling of sensitive information constituted another focal point in the year under review. A company-wide clean desk policy was introduced in 2023. In addition, rules were set for VWI’s responsibility for fire protection within the Group, and the role of corporate safety in fire protection was defined. When the LkSG came into force, processes for dealing with security service providers were also defined and implemented.

GRI 403-1, 403-2, 403-3, 403-4, 403-6, 403-7, 403-9, 403-10

A Group guideline provides uniform information about who is responsible for health care and occupational safety at all companies within the Group. We have taken up these specifications and incorporated them into a company guideline for Volkswagen Immobilien. As well as having a head of health care and occupational safety, we fulfill our legal obligations by appointing a safety officer, having a cross-structural occupational safety committee and designating an occupational safety officer. The Occupational Safety Committee is the highest occupational safety body. It is responsible for defining targets and measures along with submitting recommendations to senior management. The workforce is represented on the Occupational Safety Committee by the works council. Furthermore, managers from all areas of the company – in particular from maintenance and upkeep, as well as from relevant departments such as HR – are permanent members. This organizational structure means that all employees and their workplaces are included in the occupational health and safety system. At least one safety officer is present at each of our locations to ensure that all workplaces are monitored on site.

Occupational health services are provided by Volkswagen AG’s health care department. The commissioned occupational physicians carry out the mandatory examinations required by law, as well as the preventive examinations on offer and those requested. Our employees have the opportunity to schedule the desired and offered examinations at any time by contacting their supervisors. Supervisors receive automatic reminders about employees’ mandatory preventive medical checkups and are requested to arrange the necessary examinations. Furthermore, employees and supervisors receive occupational health advice from this unit in order to minimize hazards in the workplace.

Other services that our employees can take advantage of include travel medicine for business trips, advice on vaccination, ergonomic workplace design, advice on risk assessments, skin protection advice, flu vaccinations, psychological and psychosomatic advice and much more. These services and offers are free of charge for our employees. Volkswagen AG additionally offers a regular health checkup, which is also available to employees of Volkswagen Immobilien.

Key requirements for systematic health and safety management include conducting risk assessments for each workplace. We use a system-supported means of recording risk assessments with a central data storage facility. In connection with the risk assessments, hazards should be identified at an early stage and briefings conducted to help reduce workplace accidents and work-related illnesses. Every manager is instructed to check the workplaces in their area of responsibility at regular intervals for changes in hazards. At the minimum, they should check the workplaces during their annual inspections. Changes must be documented immediately by means of a risk assessment in the hazard assessments. If necessary, specific measures must be taken. The occupational safety specialists, occupational physicians and safety officers are available to provide support. If necessary, our managers also have the option of seeking out external consultants for added assistance. The timeliness and completeness of the risk assessments are checked annually on a random basis by the Head of Occupational Health and Safety. In addition, every member of staff receives annual health and safety training. New hires receive such training immediately during the onboarding process.

There is a greater risk of injuries and illnesses for depot and gardening staff because their jobs entail heavy physical labor and the use of machinery. We analyze the causes of each accident in detail and take steps to prevent them in the future. If an employee notices that an activity is contrary to occupational health and safety regulations or dangerous, they can refuse to carry out the activity at any time. Any deficiencies are reported to the direct line manager through the usual reporting chain and rectified by them. If it is not possible to find a satisfactory solution this way, the employee can involve advisory bodies (safety officers, occupational safety specialists) on a neutral basis, who can influence work processes outside the hierarchical structure, including through the involvement of the management. A standard Group process has been introduced at Volkswagen to ensure that information about all serious or fatal accidents involving employees or staff from partner companies is disseminated throughout the company. This ensures that specific steps can be taken at all sites to prevent similar accidents.

We also fulfill our responsibilities as an operator and client. For newbuilds, modernization and maintenance, we often commission specialized external companies, whom we require to maintain a high level of occupational safety. As part of these efforts, we appoint an external health and safety coordinator for work at construction sites, as required by law. The coordinator is present on site for large construction projects and when building work is done at a great height. Their remit includes issuing instructions to the companies involved and supervising compliance with regulations. At smaller construction sites where no health and safety coordinator is required by law, this responsibility usually lies with the client. Monitoring is performed with the aid of specifications developed by VWI that set out how the collaboration will be documented, how information about risks on each side will be shared and how safety measures will be put in place. In accordance with this, the contractor undertakes to inform its staff about the risks and agreed safety precautions before they start work and to provide the same information to any subcontractors it hires. We reserve the right to monitor compliance with the requirements.

We are currently developing a process to involve an external occupational health and safety service provider who will be responsible for the topic of mutual risk assessment for work carried out by external companies at our properties and at properties managed by us. This service provider will review and evaluate risk assessments in the future and instruct the external companies commissioned by us accordingly. It will also request and evaluate the assessment of the contractor’s work.